May 16, 2016 commentary

Well, here we are and May is half over. The last three days of last week saw soybeans retreat as traders lightened up on their long positions on ideas that we could see a significant increase on soybean acres on the June 30 report. Soybeans and wheat have already traded both sides with wheat near unchanged and beans currently down 2-3 cents. July corn opened lower and has not been able to get back to unchanged so far. The dollar is down about 65 with crude oil up about a dollar. We will see the USDA’s planting progress update at 3pm this afternoon. It looks like we will have plenty of rain in the forecast over the next 10-15 days so the trade will probably focus on the planting progress in the areas that are behind. Parts of southeastern Illinois, Indiana and Ohio are struggling to get corn planted. Some areas to the north saw temperatures as low as 27 degrees over the weekend which may add support to corn. Trade will try to digest whether any damage was done or not from the cold. Corn planting expected to be around 75% complete with soybeans about 35% planted on the update this afternoon. Informa out this morning with their latest thoughts on planting intentions. Funds still very long on soybeans and not quite ready to give up yet, but probably not wanting to add too many contracts. Even though corn rebounded last week and soybeans declined, the soybeans are still the leader in this market.

USDA announced this morning the sale of 128tmt of old crop corn to South Korea. Weather in Argentina looks good for harvest activity. Some rain should fall in the corn region in Brazil. Informa estimates corn acres at 93.4 million versus 93.6 from the USDA. They estimate bean acres at 83.0 million compared to USDA at 82.2 million. Not really anything here for corn or soybeans as neither number varies much from the USDA numbers. Weekly export inspections were strong for corn at 43.7 million bushel, but soybeans at the low end at only 7.2 million. Wheat was 13.5 million bushel.

All commodities bounced off the lows of the day and everything closed unchanged to higher except July soybeans. July beans finished down $.005 at $10.645 with November futures up $.005 at $10.55. July corn made a late surge and closed up $.0325 at $3.94. December corn finished up $.0175 at $4.00. July wheat unchanged at $4.7475. Cash basis levels were weaker on corn and soybeans today. Corn basis 1-2 cents lower with soybean basis 4-5 cents lower. USDA says corn is 75% planted versus 82% last year and an average pace of 70%. Soybeans are 36% planted versus 41% last year and an average pace of 32%. We are now behind last year’s pace but right at trade expectations.

May 13, 2016 Commentary

Hey it is Friday the 13th! That does not bother me because I got married on a Friday the 13th! Anyway, at least the early start to grains this morning is on the weak side. At 7:30am, corn down 2-3 cents, soybeans down 9-10 and wheat down 2-3 cents. If beans close lower today, this would be the third consecutive day and probably confirm that we are entering the cycle low period expected to last until the end of June. More rain in the forecast will support ideas that some corn acres will get switched to soybeans. Once again we have entered a period of what I call the “Unknown”. This time it is a negative reaction as the market tries to get a handle on how many acres will change from corn to beans. It is interesting to note that some in the trade still feel there were some acres not accounted for on the March 31 planting intentions report. That said it may be a mistake to think that the corn acres will drop by the same amount the soybean acres increase. Great, more “Unknown” information. Grains seeing pressure this morning from the dollar trading up over 400 and crude oil down about $.80.

The corn harvest in Argentina is now about 27% complete versus their average pace of 45%. Currently the corn yield is running around 143 bushel per acre versus 128 last year. Soybean harvest is still behind but now at 51% compared to 69% on the average. Early bean yields at 50 bushel per acre versus 52 last year. They are making progress, but need to have plenty of good harvest weather. USDA announced this morning the sale of 280tmt of old beans to Unknown and 140 new soybeans also. Good export news for beans but will it matter if the mindset is concerned about increase on bean acres? The close today was what I would have expected today except maybe wheat was a little higher. July corn closed up $.0175 at $3.9075 with December up $.02 at $3.9825. July beans closed lower for third day in a row at $.07 lower at $10.65 with November down $.0675 at $10.545. Looks like rain heading our way tonight and very cool tomorrow. Oh well, try to have a great weekend and we will be back on Monday!

May 12, 2016 Commentary

Finally my computer is up this morning so here we go! As we hit the break, corn up 4-5 cents, soybeans up 7-8 and even wheat up 5-6 cents. Soybeans rebounding this morning on the wet weather, bullish report and more fund buying. We are hearing, and I think rightfully so, more talk of corn acres switching to soybeans. I have been talking about this for the past two sessions and in my mind it is just a matter of how many acres get switched. Weekly exports were 43.7 million corn, 7.8 million soybeans and 10.8 million wheat. All these numbers very close to trade expectations. Once again a solid export number for corn. The dollar is back up over 200 with crude oil up about $.50. Brazil’s Senate voted to impeach their president. Here we go again! July soybeans will try to test Tuesday’s high at $10.915 and July corn will have resistance at $3.86 from Tuesday as well. USDA announced the sale of 210tmt of old corn to Saudi Arabia.

July soybeans ran out of gas at $10.8975 this morning and then turned to double digit lower numbers. Pressure on soybeans from profit taking and talk of maybe almost 2 million acres in the eastern belt getting switched to beans. This is not counting the acres in the Dakota’s that were talked about right after the March 31 planting intentions report. There probably were some acres switched in the south due to the wet weather and we have even had some acres switched in our trade territory. Overall, soybeans did not perform that poorly today, but did close lower for the second day in a row which had not occurred for the past five weeks. July soybeans never able to test Tuesday’s $10.915 high and closed down $.0625 at $10.72. Just a pause on beans or “winds of Change”? The strength today was evident in the corn market. Corn rallied on another week of solid exports and buying tied to talk of acreage changes. July corn not only traded above Tuesday’s high of $3.86, but closed up $.115 at $3.89. From a technical perspective, it appears that corn is trying turn back up out of the recent corrective pattern. Look for resistance around $3.95 on July corn, then $4.00 and then the recent high of $4.07 on April 21.

May 11, 2016 Commentary

The market is very quiet so far this morning. Maybe the fog is so thick they can’t see to trade! The soybean complex was on fire yesterday due to the sharp increase on old and new crop export projections. The trade was looking for new crop soybean carryout to be around 405 million bushel and it came in at 305. Trade estimate off a staggering 25%!!!! Good soybean prices for now, but as I said yesterday  I think soybean acres will increase in the U.S. on the June 30 report by more than 1.5 million. As we head to the break, corn down a penny, soybeans up 2-3 and wheat unchanged. The dollar lower this morning trading down about 340 with crude oil up about $.28. Still rain in our forecast for today and tonight. The eastern belt continues to be wet and cool which has slowed planting and may switch corn to beans in parts of Indiana and Ohio. I find it hard to believe the sharply higher soybean export projections for next year, especially when you know after this strong rally in soybeans, the South American farmer is going to plant beans and is already aggressively making new crop sales.

Weekly ethanol production was up 4.23% compared to last week. Corn ground for ethanol estimated at 101.01 million bushel compared to 98.291 million needed on a weekly basis to meet USDA projections. The dollar now trading down almost 600, but crude oil has turned from lower to sharply higher as oil stocks declined by 3.4 million barrels when the trade was expecting an inventory build. Neither of these factors doing anything for grain as we remain lower across the board at 11:15am. We finished lower across the board today in what was a rare, quiet day for soybeans compared to the trade of recent weeks. July soybeans closed down $.0575 at $10.7825 with November down $.015 at $10.66. The key question now is, was today just one of those we have to be lower once in awhile days or are we ready to start our next cycle low to take us to the end of June? Time will tell, but at least with the strong rally we have seen on beans is has given us a great opportunity to sell new beans and to raise our average price on previous sales. Cash basis levels on soybeans were 5-6 cents weaker today. July corn closed down $.035 at $3.775 with July wheat down $.0225 at $4.59.

May 10, 2016 Commentary

Well, it is report day! Good old soybeans just won’t give up and have bounced back this morning to erase all of yesterday’s losses. Brazil’s crop agency CONAB pegs their total corn crop at 79.96 MLN ton versus 84.66 on their April update. They place the soybean crop at 96.91 MLN ton versus 98.98 in April. They place their wheat crop at 5.83 MLN ton compared to 5.53 MLN in April. I think the lower corn number is close to what the trade was expecting with a few expecting a larger drop due to the dry weather on the second crop corn. The dollar is slightly higher and trying to be up for the sixth straight session. Crude oil slightly higher this morning at $43.63. It will be interesting to see what the market does if we just get a neutral report today, but then it will be all about the weather for the next 3-4 months. Remember, the USDA report is at 11am this morning.

USDA surprised the trade with a very bullish report for soybeans and slightly bullish for corn. Does anyone that follows my comments want to guess how the report was for wheat? Here are the key highlights of the report.

Corn-old crop exports raised 75 million bushel which after some smaller adjustments pulled old crop corn carryout down 59 million bushel to 1.803 billion. With that adjustment rolled to the start for the new crop, the first look at new crop carryout placed at 2.153 billion bushel. Trade was looking for something near 2.24 billion bushel.

Soybeans-Old crop exports raised 35 million bushel and crush raised 10 million bushel. These adjustments pulled old crop carryout down to 400 million with the trade looking for about 425 million bushel. Start the first look at new crop with a 45 million bushel lower starting point and then see that the USDA projected 145 million more for bean exports next year. New crop carryout estimated at only 305 million bushel with the trade looking for about 405 million! Easy to see where the fireworks came from today!!!! July corn closed up $.12 at $3.81 with December up $.1075 at $3.8775. July soybeans were up the $.65 limit for a brief period today before closing up $.575 at $10.84 and November closed up $.5175 at $10.675. Good market for beans and these are the numbers that the trade has to work with for now, but I believe soybean acres will increase by 1.3 million or more on the June 30 report at the expense of corn acres.



May 9, 2016 Commentary

Earlier comments from this morning were lost due to problem with website. Just a few brief thoughts for tonight. Planting progress for corn at 64% complete versus last year at 69% and an average pace of 50%. Soybeans at 23% complete versus 26% last year and average of 16%. Markets got pressured from a higher dollar for the fifth consecutive session. Farmers in Brazil taking advantage of the strong soybean rally to price new crop beans at a time when their currency is lower versus the dollar. Weekly export inspections were strong for corn at 44.9 million bushel. Soybeans at only 4.1 million with wheat at 18.3 million bushel. Sounds like we have significant chances of heavy rains through the first part of this week. Pressure also on soybeans from reports that China will auction 100,000mt of their soybean reserves per week for the balance of the year. This would amount to near 3.8mmt of their reserves. Hopefully, we will get along better with our webpage tomorrow! July corn closed down $.085 at $3.69 Without help from the report tomorrow, July corn looks like it could extend the slide towards $3.60. July soybeans finished down $.0825 at $10.265 and July wheat closed down $.0725 at $4.565.

May 6, 2016 Commentary

Markets started out slightly lower last night but are now trying to stabilize and turn higher. Help coming from a weaker dollar this morning which eases some of the pressure from the dollar’s bounce back this week. I would expect a quiet session today ahead of the planting progress update on Monday and the USDA report next Tuesday. Our first look for new crop corn carryout next Tuesday is expected to be estimated around 2.30 billion bushel. Conab will give us new production estimates next Tuesday on the Brazilian corn and soybean crops. From a technical point, July corn needs to hold the 100 day moving average at $3.74 or we could drop as low as $3.60 to find support. Support at $3.78 for December corn is critical to avoid the corn market from turning negative. It is estimated that the soybean harvest in Argentina is around 40% complete versus 66% last year at this time. The Kansas wheat tour ended yesterday and their wheat crop projected at a whopping 382 million bushel. July soybeans broke below the 10 day moving average yesterday on a key reversal lower. July beans need to hold support at $9.9675 which is the 20 day average.

Early price action after the break this morning has corn trying to lead us higher. USDA announced the sale of 132,000 tons of old crop corn to Israel. Ag Rural lowered the second crop corn (safrinha) production in Brazil by 5.7mmt. Traditional commodity funds are estimated to be long 149,000 soybean contracts, long 46,000 corn and short 68,000 wheat contracts. Latest talk says that the beans that have been harvested in Argentina are actually yielding better than last year. Rumors circulating that China may actually sell some of their soybean reserves. Looks like there is a little something for everyone today! Just when you think your about to pronounce the soybean rally dead, they come storming back. As of 10:40am, July soybeans have gained back all of yesterday’s losses. Corn and wheat still higher but have been stuck in a quiet trade so far. Apparently, those rumors about China selling some of their soybean reserves are being discounted by the trade.

Soybeans stayed strong into the close with July up $.225 at $10.3475 and November up $.205 at $10.22. July corn closed up $.0375 at $3.775 with December up $.0325 at $3.8475. July wheat up $.005 at $4.6375. July wheat just $.1425 above the contract low established on March 2. As of the grain close, the dollar back up over 115 after trading lower this morning. Looks like warmer weather for the weekend so hopefully we get more beans planted. Be safe and we will be back on Monday!

May 5, 2016 Commentary

Soybeans off to the races again this morning as July and November futures trade above yesterday’s highs. Corn and wheat trying to follow beans but are not having much luck so far. The dollar up gain today and currently up over 340 with crude oil screaming $2.00 higher. The trade expects the corn crop to be over 60% planted on Monday’s update. Weekly export sales were 30.3 million corn, 30.0 million soybeans and 6.6 million wheat for old crop on all commodities. Another strong export number for old soybeans, but the old crop corn number was less than expected by the trade. After briefly trading above yesterday’s highs, Soybeans have sold off and are now slightly lower at 9:15am. We saw this type of trade on beans yesterday, but they did bounce back to close slightly higher. Stay tuned! Pressure on grains today as the dollar now trading up over 550 at 10:50am. Crude oil still higher but now a dollar off the high of the day.

I commented yesterday that the market displayed signs of a move to a lower trade. However, the strength early this morning started to make me think that I might want to re-evaluate my thoughts. Apparently, the funds wanted one last push higher before turning sellers. So, here we are at 11:30am and soybeans are leading us lower with double digit losses. July beans currently down $.16 as profit taking has set in and we are trading below yesterday’s lows on beans, corn and wheat. Today turned out to be a bad day for soybeans. July soybeans posted an outside trading day with a sharply lower close. July beans closed down $.2175 at $10.1225. Somebody said “Show me the Money” but unfortunately we saw it leaving the bean market instead of supporting higher trade. To compound matters cash basis levels for soybeans were 6-7 cents weaker as well. July corn closed down $.03 at $3.7375 with December down $.035 at $3.815. July wheat closed down $.08 at $4.6325. This wheat market is more dead than my dog and he died almost two years ago. Market looking for the planting progress update on Monday and the USDA report next Tuesday. See you again tomorrow.

May 4, 2016 Commentary

We are back trading after the break with corn down 1-2 cents, soybeans down 4-5 and wheat up 1-2 cents. To this point, we are not recovering from yesterday’s sharp declines. The dollar is up about 200 again this morning which adds some pressure to prices. Crude oil bouncing back and up about $.80 and near $44.50. With a USDA Supply and Demand Report next Tuesday, the market may need a break to analyze the crop damage in South America versus the large new crop projected ending stocks that we should see on the report. Corn planting remains well above our average pace and we should see a decent increase on soybean planting on Monday’s update. On the economic front the talk of a slowdown of the Chinese economy is back in the news. Sounds like our weather warms up starting tomorrow and we can hopefully get back to planting. The close today may give us a clue for price direction in the weeks ahead.

Cash basis levels at the river are lower this morning. Nearby corn basis is $.03 weaker with nearby soybean basis $.02 to $.04 weaker. Ethanol production was down .43% versus last week. Second week in a row of lower production. Corn ground for ethanol estimated at 96.92 million bushel compared to the 98.446 million needed on a weekly basis to meet the USDA projection of 5.25 billion bushel. At 11am, soybeans bouncing back and have just about recovered all of yesterday’s losses. Corn and wheat remain quiet. USDA announced this morning the sale of 107,500 tonnes of U.S. corn to Japan for this marketing year. So far corn not showing much excitement today. Soybeans did manage to trade above Monday’s close and were up $.1575 at one time but closed up only $.04 at $10.34 on the July futures. July corn finished down $.03 at $3.7675 and is now only $.155 higher than our close on this date last year. July soybeans remain strong and are currently $.5775 higher than last year. The trade showed signs today that we may now move to a choppy trade with a lower bias. Time will tell.

May 3, 2016 Commentary


At the break this morning, corn slightly lower with wheat unchanged and soybeans up 5-6 cents. Fund money continues to flow into the grain trade as the period of our “Unknown” is still present. Reports from Argentina say their soybean crop has been reduced by about 9mmt due to the excessive rain. Also, the trade struggling with the size of the corn crop in Brazil. Some feel the second crop corn acres could be higher than estimated, but there has been yield losses due to the very dry weather. The dollar weaker again today and now trading to levels not seen since early 2015. Crude oil down about $.50 but still above $44.00 a barrel. The USDA reported the corn crop at 45% planted versus an average pace of 30%. The trade still feels like the USDA is lower than the actual planting pace but those are the numbers we have to work with for now. Soybeans reported at 8% planted versus an average of 6%. May soybeans will look to challenge the $10.50 level today with May corn working to post a close above $3.92.

As of 10:30am, the markets have turned lower across the board with soybeans leading us down. May beans down 8-10 cents with corn down 10-11 and wheat down 15-16 cents. Cash basis levels have weakened 6-8 cents on nearby soybean bids. The dollar has bounced off the recent lows and currently trading over 200 higher. The stock market currently down about 200 points with crude oil down over a dollar. We finished the session with double digit losses across the board. Soybeans lead us lower today after the July futures traded to a 16 month high. Profit taking took over after the dollar bounced back, equities turned lower and the stock market posted double digit losses. Corn and wheat posted outside lower closes today with soybeans falling just a few cents away from trading below yesterday’s low. July corn closed down $.12 at $3.7825 with July wheat down $.17 at $4.7075. July beans finished down $.1375 at $10.30. We have experienced this before over the past two weeks on soybeans, but they have managed to bounce back and trade even higher after a break. Tomorrow could be interesting as we wait to see if this is just a one day break or if we have we reversed the trend.

© 2020 CHS Inc.